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The Political Economy of Data: EU Privacy Regulation and the International Redistribution of Its Costs

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Protection of Information and the Right to Privacy - A New Equilibrium?

Part of the book series: Law, Governance and Technology Series ((LGTS,volume 17))

Abstract

In the wide-ranging policy debate on data privacy, the economic impact of regulation has thus far received very little attention. Yet data privacy legislation has the potential to affect different groups and countries asymmetrically, leading to important redistributive effects. This paper aims to illustrate the economic impact of data regulation, using the EU’s General Data Protection Regulation (GDPR) as an example, and using econometric methods (GTAP) commonly used in trade economics. GDPR introduces restrictions on cross-border trade flows, which affects input prices to the service industry, and in turn, EU exports, with a direct welfare effects on the EU is a loss of up to € 260 per European citizen. The findings of this study have important implications for the discussions around policy design and regulatory efficiency. The severe economic impact of the GDPR proposal demonstrates that data connectivity and economic interdependency effectively limit the policy space for non-economic regulation. Moreover, this paper shows that mercantilist data restrictions are counterproductive and affect the protecting market more than those who are restricted in accessing it.

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Notes

  1. 1.

    See also Lee-Makiyama (2013).

  2. 2.

    Charter of Fundamental Rights of the European Union, 2000/C 364/01.

  3. 3.

    On The Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data, Directive 95/46/EC.

  4. 4.

    Floridi (2013).

  5. 5.

    Inter alia, OECD (2005).

  6. 6.

    Article 49, Treaty on the Functioning of the European Union (TFEU).

  7. 7.

    Article 56, TFEU.

  8. 8.

    WTO General Agreement on Trade in Services (GATS); note the exception for ‘the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts’ under Article 14.2. For its interpretation, see Hindley, Lee-Makiyama, Protectionism Online, ECIPE Working Paper, 12/2009.

  9. 9.

    GTAP8, 2007.

  10. 10.

    World Input Output Database, 2013.

  11. 11.

    McKinsey Global Institute (2011).

  12. 12.

    World Bank (2013).

  13. 13.

    See note 12.

  14. 14.

    UNCTAD (2009).

  15. 15.

    European Commission, Impact Assessment, Regulation of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation) and Directive of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data by competent authorities for the purposes of prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and the free movement of such data, SEC(2012) 72 final.

  16. 16.

    Bauer et al. (2013).

  17. 17.

    Narayanan et al. (2012).

  18. 18.

    See note 15, United Kingdom (2012).

  19. 19.

    Francois (2013).

  20. 20.

    Andorra, Argentina, Canada, Faroe Islands, Guernsey, Iceland, Isle of Man, Israel, Jersey, Lichtenstein, New Zealand, Norway, Switzerland and Uruguay.

  21. 21.

    Multinational corporations commonly employ legal constructs like model contract clauses (MCCs) or binding corporate rules (BCRs).

  22. 22.

    See note 20.

  23. 23.

    See note 17.

  24. 24.

    Using final private consumption with constant prices (2005), Eurostat (2014).

  25. 25.

    Eurostat (2013).

  26. 26.

    See Baldwin (2012), Miroudot ((2012).

  27. 27.

    See EU–South Korea Free Trade Agreement, Art. 7.43.

  28. 28.

    Castro (2013).

  29. 29.

    See Mayer (2009), Brown and Stern (2006), Cooper (1968).

  30. 30.

    Erixon (2009).

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Authors and Affiliations

  1. European Centre for International Political Economy (ECIPE), Rue Belliard 4–6, 1040, Brussels, Belgium

    Hosuk Lee-Makiyama

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  1. Hosuk Lee-Makiyama
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Correspondence to Hosuk Lee-Makiyama .

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Luciano Floridi

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Lee-Makiyama, H. (2014). The Political Economy of Data: EU Privacy Regulation and the International Redistribution of Its Costs. In: Floridi, L. (eds) Protection of Information and the Right to Privacy - A New Equilibrium?. Law, Governance and Technology Series, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-319-05720-0_5

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